Mexico’s Anti-Money Laundering Procedures Fall Short in Fight Against Financial Crimes

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Mexico’s efforts to combat money laundering and terrorist financing have been praised by international experts, but a new report highlights several weaknesses in the country’s anti-money laundering (AML) procedures.

IMF Assessment Reveals Weaknesses

The International Monetary Fund (IMF) conducted an assessment of Mexico’s AML/counter-terrorist financing (CFT) system and found that while the country has made significant progress in implementing preventative measures, it needs to step up its efforts in pursuing launderers and confiscating their assets.

Significant Risk of Money Laundering

Mexico faces a significant risk of money laundering, primarily due to activities linked to organized crime such as drug trafficking, extortion, corruption, and tax evasion. The country’s financial intelligence unit is producing good financial intelligence, but this information is not often used to investigate money laundering or terrorist financing.

Financial Sector Supervision

Financial sector supervisors in Mexico have implemented reasonable risk-based approaches to AML/CFT supervision, and financial institutions have improved the quality of their suspicious transaction reporting over the past few years. However, oversight of designated non-financial businesses and professions is underdeveloped and significantly under-resourced, resulting in a low level of suspicious transaction reporting.

Investigation and Prosecution

The report also found that Mexican authorities are not investigating and prosecuting money laundering in a proactive and systematic fashion, but rather on a reactive case-by-case basis. Additionally, the government does not systematically pursue confiscation of proceeds and instrumentalities as a policy objective, which is a significant concern given the risks posed by money laundering and terrorist financing.

Lack of Identification of Beneficial Owners

One of the most serious concerns highlighted in the report is the lack of identification of beneficial owners across all sectors. This means that entities are unable to effectively assess and manage money laundering and terrorist financing risks, leaving them vulnerable to exploitation.

Conclusion

While Mexico has made progress in implementing AML/CFT measures, it needs to take further action to address these weaknesses and mitigate the significant risks posed by financial crimes.

Recommendations

• Improve the use of financial intelligence to investigate money laundering and terrorist financing
• Enhance oversight of designated non-financial businesses and professions
• Pursue a more proactive and systematic approach to investigating and prosecuting money laundering cases
• Systematically pursue confiscation of proceeds and instrumentalities as a policy objective
• Improve identification of beneficial owners across all sectors